February 10, 2009

You get what you pay for

After Hank Paulson's turn as Treasury Secretary, the conventional wisdom became: We don't need as Treasury Secretaries anymore of these CEOs with 700 million simoleons, a fancy suit, and a firm handshake. We've had enough self-confident blowhards with endless Wall Street connections and conflicts of interest. Instead, we need a ... civil servant! That's right, a career bureaucrat, a regulator. Why didn't anybody think of this before?

So, now, we've got one. He gave his first big speech today to explain his rescue plan, to reassure and stabilize the markets, to impart confidence, to demonstrate there is a strong hand on the tiller. Unfortunately, upon getting a gander at little Timmy Geithner in action -- Noah Millman said he looked like an elf giving a book report -- the markets immediately fainted with the vapors.

The next iteration of the conventional wisdom will probably be that we can't have some wimpy nerd as Treasury Secretary, we need a prime specimen alpha male, a pin-striped powerhouse, a real silverback with a great head of silver hair and a million dollar smile, like ... like former Treasury Secretary John Connally!

Back in 1971, Richard Nixon developed a political crush on the conservative Democrat Connally, a former governor of Texas (who was wounded by Lee Harvey Oswald on 11/22/1963), appointing him Treasury Secretary, and picturing Connally as his heir in 1976. Connally talked Nixon into all sorts of zany adventures, like wage and price controls. When Connally ran for the GOP nomination in 1980, he raised the most money -- corporate CEOs liked his look -- but was obliterated by Reagan. Connally won only one delegate, Ada Mills of Arkansas, who became known as "The $11 Million Delegate."

My published articles are archived at iSteve.com -- Steve Sailer

30 comments:

albertosaurus said...

Connally is the last US Presidential candidate to actually defend the safety record of the American nuclear power industry. When campaigning against Ted Kennedy he said, "We lost more lives at Chapaguidick than we did at Three Mile Island".

I love politicians who get the math right.

Dutch Boy said...

Give the poor guy a break! If I had to pay a back tax bill as big as his I'd be the one having the vapors!

Anonymous said...

Geithner's bold new plan to save the economy was going to be the "bad bank", an idea so stupid and venal that even the Democrats wouldn't support it. On short notice, he just couldn't come up with anything else. In the coming weeks, look to see the "bad bank" idea reintroduced in disguised form. Instead of buying the "toxic assets" of the big banks, it will merely guarantee their value which will keep the taxpayers in doubt about how much the bailout is ultimately going to cost them. We are witnessing the largest theft of public money in the history of the world.

Anonymous said...

"We are witnessing the largest theft of public money in the history of the world."

They're not done yet:

http://www.slate.com/blogs/blogs/kausfiles/archive/2009/02/10/the-money-liberal-conspiracy-at-work.aspx

Not only am i paying someone's slese mortgage, I'm paying them to be a useless lump on the dole! Start hiding your money if you can. We are headed for bad times. Gold is up $25 last time I checked. This whole slow motion train wreck isn't even close to being over. What a disaster.

Donald McDonald said...

Steve, excellent points. I have been thinking about the body language, image, and looks of the gov't guys handling this since back in September when the debacle really got underway.

I thought Paulson had some things going for him, such as height, square shoulders, ex-football player at Dartmouth, ex-Goldman CEO, etc., basically Alpha male characteristics that would instill confidence in people, but the more I saw him on TV and read about him, the less Alpha, strong, and confident he seemed. He's a bad speaker with a scratchy voice, and has an awkward public speaking style. Also, whenever they showed clips of him walking around, he was hunched over, head down, and had an awkward gait. Plus his jacket was always unbuttoned and crumpled, flapping around as he walked, making him come off as not composed, absent-minded, dorky. He also seems like a weirdo and slightly psycho-ish.

Turns out, he really isn't some Alpha uber jock but is actually kind of a weirdo. From an article about Paulson in CNNMoney http://money.cnn.com/magazines/fortune/fortune_archive/2004/01/12/357911/index.htm

"Jason, our driver, pumps the brake and remarks coolly, "Look, a snake." "Where?! Stop!!" Paulson shouts. Leaping from the SUV so frantically that a passenger in the vehicle behind us thinks, "Hank has seen a dead body or something," Paulson races down the road, poking at the thick underbrush. He fails to find the reptile. "I love ..." he says sadly, his voice trailing off. "Snakes?" I ask. "Yes," he replies matter-of-factly. "I like to hold them and look at them."

"Wendy, his wife of 34 years, can immediately tell that Paulson has had a reptile experience. "He had that snake look in his eyes," she says."

I mean, I have nothing against animal lovers, but all the guys I knew who were into snakes, tarantulas, had them as pets, etc., were always big weirdos bordering on sociopathic.

Anonymous said...

The next iteration of the conventional wisdom will probably be that we can't have some wimpy nerd as Treasury Secretary, we need a prime specimen alpha male, a pin-striped powerhouse, a real silverback with a great head of silver hair and a million dollar smile,

A Big, Swinging,... well know the rest.

Donald McDonald said...

Regarding little Timmy Geithner, Millman nailed it on the head. The big pointy ears, adolescent high-pitched voice that constantly cracks, babyish bulbous/rounded forehead........he's basically an elf.

His speech instilled as much confidence as a speech by an elf/dwarf/midget/Hobbit/shrimp would be expected to.

Also, he kept on looking around rapidly around the room while giving his speech, not fixing eye contact for more than a second or two. This always betrays a lack of self confidence and the audience always seems to pick up on it. It definitely does not project confidence and strength.

I remember the first time hearing about Timmy when Lehman Brothers collapsed back in September. The media portrayed him as some kind of brilliant bureaucrat and touted his "international" experience. They also said that he spoke Chinese and Japanese. Then I remember it changed. The media stopped saying that he speaks Chinese and Japanese and always noted that he has studied Chinese and Japanese. And Wikipedia says the same thing: "He has studied Chinese[8] and Japanese."

http://en.wikipedia.org/wiki/Timothy_F._Geithner#Early_life_and_education

This is, of course, another way of saying that Timmy CANNOT speak Chinese or Japanese, and that he is nowhere near fluent in these languages. They never even describe him as being conversational or proficient (which you see a lot in bios of businessmen/bureaucrats to describe their language skills; not fluent but passable). The majority of American high school graduates will have "studied" a foreign language in high school without being anywhere near passable in the language, and it'd be ridiculous if people started advertising that they had just "studied" Spanish.

Of course Timmy only gets away with this because Chinese/Japanese might as well be languages from another galaxy for most Americans. They're not just regular foreign languages like Spanish and French that we all come into some degree of contact with.....they might as well be the Vulcan and Klingon languages. Therefore Timmy must be brilliant just for having "studied" Chinese/Japanese. Just like after having "studied" nuclear physics, mathematics, rocket science, etc., everyone assumes you must be smart despite how unsuccessful or unknowledgeable you are in the field.

The nightmare scenario I have that leads to the Great Depression II/hyperinflation begins with Timmy giving a press conference. A Chinese financial journalist asks him a question in Chinese, and Timmy is completely flustered and has no clue what the journalist says, betraying his lack of any ability in the language. The Chinese then realize that the entire US economy and political class is completely full of sh*t and dump their Treasury bond holdings, bursting the bond bubble, and crashing the US economy.

RKU said...

We are witnessing the largest theft of public money in the history of the world.

Yep, indeed! We're going to vastly outscore the record set by those nasty Oligarchs under drunken old Yeltsin.

Anything Russia can do, we can do better. We can do anything better than them.

Go USA!!!

Svigor said...

Anything Russia can do, we can do better. We can do anything better than them.

USA! USA! USA!

That keeps gettin funnier, every time I see it.

Big Bill said...

Keynes explained the "liquidity trap": interest rates so low that "helicopter money" will jsut be saved 9by smart people) who won't spend it and get teh consumption going. So they need to give the money to the losers, the morons, the gamblers, the junkies and welfare queens who will spend the sh!t out of it on bling, booze and broads.

THAT is a perfect Keynesian recovery.

They do not want to give it to the savers, the cautious, the careful, the people with foresight, the planners, since thy will not spend it, they will save it. And savings are BAAADDDD for the recovery.

Wikipedia ("liquidity trap") explains how governments have historically been very sneaky in spending inflated cash, pretending that it addresses some wrong or cures some injustice or misfortune -- any lie at all in order to get the cash out there and get it spent.

Hell, the reason they are fighting to keep illegals by the tens of millions is because illegals with their 1st grade education and illiteracy are saps--idiots, really--and can be expected to p!ss away whatever cash they are given on dope, Dos Equis and donuts.

Right now that is what the Democrats desperately want. Idiots to spend something, ANYTHING to get the economy going. And they really don't give a sh!t who they give the money to and who spends it.

The economy must survive. The nation can die.

testing99 said...

In order to spend you must first have money.

Even for illegals that means an economy that pays them to do something. And even for a government that means having some tax revenue roll in.

China has so far decided to stay with Treasuries, mostly for lack of any alternative. Europe is worse, than our own mess, and their internal system is even worse than Europe.

If you think American bankers are crooks and cheats, Europeans are much worse on both accounts, and Chinese Bankers worse than the Europeans.

The problem is not just a liquidity trap, but lack of anything to get spending going again, along with basic productivity measures.

What got the US out of the Depression was first the draft which sucked all the unemployment out of the system, then War production.

Something along those lines, particularly military spending immediately on stuff like ships and planes and tanks would be great.

Not only do high-paying manufacturing jobs come back, immediately, but basic increases in production capacity and skills by the workforce increase productivity, and inject capital into manufacturing.

The US also gets lots of military stuff to threaten people with, credibly. A nation with 12 aircraft carriers cannot afford to lose one, so cruising off Pakistan's coast for two weeks is not a threat. A nation with twelve plus another twenty is a nation with 32 Air Craft Carriers, and several can be on station off Pakistan just to make a point (well, along with their carrier group).

But the biggest boost is jump-starting manufacturing from which all else flows.

Obama knows this but would rather see the nation ruined than spend an extra penny on military stuff.

headache said...

Americans are obsessed with the alpha male. This is why they thought having them in charge of WS would make everybody wealthy. Perhaps its time to learn a lesson from that country everybody likes to buy Porsche's from, but otherwise loves to hate: Germany. The Bundesbank have been regulating money since WWII with the result that the currency has been stable, at least the Deutsche Mark that is. As far as I know there also is not the conflict of interest inherent in Fed, which apparently is run like a private bank which lends money to the US gov. Sadly the Bundesbank has been shoved aside by the EU central bank so I guess eventually the rot will also come to Germany.

However up to now the Bundesbank was run by bureaucrats, those famous boring German ones who peruse every little word written down somewhere and make sure all the little rules are enforced. This may seem boring but coupled with a good manufacturing base can do wonders. I'd rather have boring bureaucrats in charge than all these charismatic alpha males with their paws in the till.

headache said...

"We are witnessing the largest theft of public money in the history of the world."

And what's so zany about it is that it's being done in full daylight while everybody watches on the telly, not comprehending a thing. I guess if these guys are so good at it they deserve the money after all.

headache said...

"Europe is worse, than our own mess,"

t99, that was a bit fast on the keyboard. By what measure can you make such a statement? The savings rate in Europe, specifically he German speaking and Nordic countries is much higher than the US. Their debt is much lower. Their infrastructure is mostly modern and in good shape and they still have a manufacturing base. And they have far fewer social problems and schisms. The main problem in Europe is the overbearing EUrocracy, aging and immigration. But that’s also a problem in the US. I think from the fundamentals it’s obvious the US system is much more rickety.

Anonymous said...

t99 -

"A nation with 12 aircraft carriers ... A nation with twelve plus another twenty is a nation with 32 Air Craft Carriers"

You know, usually when t99 writes something that can be verified it's almost always false.

This time, he's right. 12 plus 20 does equal 32.

Congratulations testing99.

-Steve Johnson

Anonymous said...

Connally won only one delegate, Ada Mills of Arkansas, who became known as "The $11 Million Delegate."

I believe Rudy Giuliani shattered that record, even adjusting for inflation.

headache said...

Anon sed:
"Geithner's bold new plan to save the economy was going to be the "bad bank""

I love that idea. Apparently Deutsche Bank boss, Ackermann, also floated that idea with then Chancellor Schröder in 2002, right after the dotcom bust. So it seems this thing with the bad papers has a history. Recently he came around the corner again with the same idea, but did not manage to snag the current finance minister in Germany, Steinbruck. Good thing. Otherwise we would be made to cough up for most probably unimaginable liabilities.

I have a sneaky suspicion the masters of the universe (bankers) are hiding a lot more dirt than we can imagine. They are constantly scheming for ways to unload all that shit on us (tax payers). The spiel so far has been that if we don't bail them out they will go down and drag us under. However, quite a few institutions have gone down so far and most of us still have our coffee, porridge, shirt and old computer. Since we don't own anything much else we did not notice the going down part.

In reality we could let almost all of these institutions go bust and would come out better than taking on their debt. Of course many of them would loose a few quid which is an unbearable thing for them and their fancy, sophisticated spouses to have to go through. And then the governments have a lot of assets tied up with said banks. This is most probably the real reason why we will have to cough up for everything anyway.

Anonymous said...

"Perhaps its time to learn a lesson from that country everybody likes to buy Porsche's from, but otherwise loves to hate: Germany."

Who hates Deutschland? I've got no problem with them. Now those Andorrans, sneaky mountain folk they are. Can't be trusted with a guilder!

Mr. Anon said...

"testing99 said...

A nation with twelve plus another twenty is a nation with 32 Air Craft Carriers, and several can be on station off Pakistan just to make a point (well, along with their carrier group)."

A nation with 32 aircraft carriers is a nation continuously armed to fight WWII. Maintaining that level of military spending would certainly bankrupt our country, and in pretty short order. In case you hadn't noticed, T99, military spending is inherently unproductive - paying people to build nothing and buying things that are intended to destroy other things, or be destroyed themselves.

Anonymous said...

t99, reading your posts obviates the need for mind-altering substances. I want to live in your anti-reality, where WASPy Harvard elites produce television shows that prevent young men from getting laid, and all we need is a good war with Pakistan to cure what ails us.

Anonymous said...

Americans are obsessed with the alpha male. This is why they thought having them in charge of WS would make everybody wealthy.

I have to agree there. Maybe we should be more concerned with such old-fashioned things as honesty and integrity instead.

Anonymous said...

No, Testing 99.

If war were soooooo great for the economy, let's just nuke NYC and rebuild it!!

What got US out of Depression was, a: its competition -- Europe and Japan were smashed in WWII, and US had lots and lots and lots of cheap oil (energy.) In fact the Railroad Commission was tasked with controlling petroleum production out of Texas and Wyoming, lest the glut collapse the price.

US is no longer oil self-sufficient. This, even more than all else, is the cause of our troubles. (which is not to diminish Wall Street's malfeasance -- let's grab our pitchforks!) But our economic collapse is due as much to our vastly costly military empire, which is needed to keep the oil flowing from countries that hate our guts, as it is to our own homegrown crooks.

But if gov't is determined to print money, they need to spend it on a crash program of building nuclear power plants and electrifying the railways for goods transport.

Cheap abundant energy and Yankee knowhow (which we do still have a little, you know) we can regain our old selves again. Well, that, plus cut off all foreign aid and cancel the welfare state.

And if we don't do the above, you think now is bad, wait til Peak Oil really starts to kick in. You ain't seen nothin' yet.

Ronduck said...

Headache said...

The main problem in Europe is the overbearing EUrocracy, aging and immigration.

Actually if you look at your three point list only the EU is a problem, the other two are symptoms of the EU.

David said...

The only advantage military spending would bring is more military adventures - bluntly, a big war like WWII. The advantage would be relative: we wipe out any competition. Then the world comes to us.

But this will not work. We already did that. And what happened? We were on top until corporations figured out how/were allowed by new trade agreements to shlep the US superior manufacturing base overseas, where coolies make things for pennies and dare not complain.

If were we to build up manufacturing in order to fight WWIII and blow up our competitors now, at least one of at least two things would happen:

1 - Immediately, corps would offshore: goodbye hard-won manufacturing advantage

2 - All the manufacturing (planes, bombs, and such) would take place overseas anyway; none of it would be done here in the first place.

And then, there are all those sticky moral arguments against murdering whole populations to shore up your economy. Darn.

Anonymous said...

"And then, there are all those sticky moral arguments against murdering whole populations to shore up your economy. Darn."

That loser stuff is for Germans, Japanese and Afrikaners who can wail and gnash their teeth for all eternity. Alpha type countries such as the US, Britain and Israel don't worry about that shit.

headache said...

Ronduck sed:

"Actually if you look at your three point list only the EU is a problem, the other two are symptoms of the EU."

Good point! Who'se gonna rid us of these leaches?

Donald McDonald said...

Paul Volcker seems pretty Alpha malish, but in good ways and not in African Big Man ways.

He's around 6'5" with bulk and big shoulders and always (or atleast used to) smokes/chomps on cigars.

He's got those Alpha features and projects strength, but seems to have integrity and have the discipline to cut through the BS and do what needs to get done.

After all he hiked those rates sky high in the early '80s. It's hard to see Greenspan have the balls to have done that, even with strong public opinion against inflation going for him.

Too bad Volcker's too old and doesn't have a bigger role....and we have to deal with Elven Eagle Scout lil Timmy Geithner.

t98 said...

What will save us is to raise big lovely guns to the sky and shoot manly missiles deep into the weaker, more feminized (or Beta male) countries.

SKT said...

I've never really envisioned economists as being alpha males, and a took a lot of Economics courses in college. Geithner's look is about typical for an Economist, but I knew that he was a dud when he tried to explain his way out of not paying his taxes.

jimbo said...

Geitner's speech left me wanting that slimeball Paulson back. And I waited in vain for any reporter to ask him the following questions:

"Have these banks (BofA, Citi, Wells, etc.) been determined to be solvent according to FDIC regulators?"

"If so, what is the problem?"

"If not, why have they not been shut down and put into receivership according to routine regulatory practices?"